Kore Us REIT · SGX:CMOU
Kore Us REIT — Keppel Pacific Oak US REIT — Investor Presentation (March 2020)
36 slides from Kore Us REIT's investor presentation, March 2020
Slide 1: Investor Meetings March 2020
Investor Meetings March 2020
Slide 2: Important Notice
Important Notice The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, uncertainties and
Slide 3: Overview
Overview Tenant lounge The Westpark Portfolio Seattle, Washington
Slide 4: About Keppel Pacific Oak US REIT
Benefitting from Unique exposure solid US office Tax advantaged to key US real estate structure growth markets fundamentals Sponsors ▪ Keppel Capital and KPA US Asset ▪ Pacific Oak Capital Advisors LLC, also advisor for Pacific Manager Oak Strategic Opportunity REIT which hold 6.87% of units in KORE
Slide 5: Key Milestones since IPO
Key Milestones since IPO Listing Date to Listing Date to Jun 2019 Dec 2019 30 Jun 2018 31 Dec 2018 Achieved DPU of 3.82 Achieved DPU of 6.22 US Achieved 1H 2019 DPU of Achieved FY 2019 DPU of US cents, 0.5% above cents, 2.0% above IPO 3.00 US cents, 31.0% above 1H 6.01 US cents, 31.2% above actual I
Slide 6: First Choice Submarkets in Key Growth US Markets
First Choice Submarkets in Key Growth US Markets SEATTLE, Washington (42.4%) ATLANTA, Georgia (6.5%) Overview 13 freehold office buildings The Plaza Buildings Bellevue Technology The Westpark Powers Ferry Northridge Center and business campuses Occupancy: 97.3% Center Portfolio Occupancy: 98.6% Occu
Slide 7: Diversified Portfolio with Low Tenant Concentration Risk
Diversified Portfolio with Low Tenant Concentration Risk Over 36% of portfolio NLA in key growth sectors of technology and healthcare • KORE’s buildings and business campuses in the tech hubs of Seattle, Austin and Denver contribute ~58% of CRI • Top 10 tenants contribute only 19.4% of cash rental i
Slide 8: Market Outlook
Market Outlook Tenant lounge, 1800 West Loop South Houston, Texas
Slide 9: Sound US Economic Fundamentals
Sound US Economic Fundamentals % GDP Growth % Labour Force Participation 3.5 0.67 3.0 0.66 2.5 0.65 2.0 0.64 1.5 0.63 1.0 0.62 Fitness centre, The Plaza Buildings, Bellevue, Seattle 0.5 0.61 0.6 US Economy at a Glance 0.0 2.3% 3.6% GDP (1) (2) Labour Force Participation Rate Real GDP growth Unemploy
Slide 10: Positive Economics in KORE's Key Growth Markets
Positive Economics in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average Real GDP Growth Average(1) 5.6% 5.4% 2014-2018 Key Growth Markets Gateway Cities 5.0% 4.0% 4.0% 3.9% 4.1% 3.7% 3.9% 3.2% 2.9% 2.8% 2.5% 1.8% 1.9% 1.6% 1.2% Atlanta Austin Dallas Denver H
Slide 11: Rising Employment in KORE's Key Growth Markets
Rising Employment in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average Employment Growth Average(1) 2014-2018 Key Growth Markets Gateway Cities 4.0% 3.6% 2.8% 3.0% 2.9% 3.0% 2.8% 2.8% 2.9% 1.6% 1.7% 1.9% 1.7% 1.8% 1.3% 1.4% Atlanta Austin Dallas Denver Houst
Slide 12: Expanding Population in KORE's Key Growth Markets
Expanding Population in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average Population Growth Average(1) 2014-2018 Key Growth Markets Gateway Cities 2.9% 2.5% 2.0% 2.0% 1.8% 2.0% 1.5% 1.7% 1.2% 0.9% 1.0% 0.7% 0.7% 0.3% 0.5% 0.1% -0.1% Atlanta Austin Dallas Den
Slide 13: Positive Economic Outlook in KORE's Key Growth Markets
Positive Economic Outlook in KORE’s Key Growth Markets KORE’s key growth markets are forecasted to outperform national average Real GDP Growth Average Forecast(1) 4.0% 2018-2022F Key Growth Markets Gateway Cities 3.5% 3.5% 3.1% 3.1% 2.9% 3.0% 3.0% 3.0% 2.7% 2.5% 2.6% 2.2% 2.2% 2.0% 2.1% 2.0% 1.8% 1.
Slide 14: Positive Job Outlook in KORE's Key Growth Markets
Positive Job Outlook in KORE’s Key Growth Markets KORE’s key growth markets are forecasted to outperform national average Employment Growth Average Forecast(1) 3.0% 2018-2022F Key Growth Markets Gateway Cities 2.6% 2.3% 2.0% 2.0% 2.0% 1.7% 1.9% 1.5% 1.6% 1.5% 1.4% 1.2% 0.9% 0.9% 1.0% 1.0% 0.7% 0.7%
Slide 15: High Tax States are Losing People to Low Tax States
High Tax States are Losing People to Low Tax States Individuals are moving to zero or low income tax states, accelerating population growth in KORE’s key growth markets State Individual Tax Rates (as at July 1, 2019)(1) Key Growth Markets 13.30% 13.30% Gateway Markets 10.75% 8.82% 8.95% 8.40% 6.99%
Slide 16: Low Corporate Tax States are Attracting New Businesses
Low Corporate Tax States are Attracting New Businesses Companies are relocating to where they have the greatest competitive advantage State Corporate Income Tax Rates (as at July 1, 2019)(1) Key Growth Markets Gateway Markets 11.50% 9.50% 8.84% 8.84% 8.00% 8.25%8.51% 6.99% 6.50% 5.75% 6.25% 5.50% 4.
Slide 17: 2020 Rankings for Overall State Taxes
2020 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best 22 45 Key Florida 4 Growth Texas 13 Gateway Colorado 17 Markets Washington 19 Georgia 32 Illinois 35 Key Massachusetts 36 Growth Markets Connecticut 47 Average
Slide 18: Last 12 Months Rent Growth
Last 12 Months Rent Growth Last 12M Rental Growth(1) 10.0% 10.0% 8.2% Key Growth Markets Gateway Cities 8.0% 7.4% 8.0% 6.2% 5.9% 6.0% 5.4% 6.0% 3.6% 3.5% 3.3% 4.0% 3.1% 3.8%4.0% 2.7% 2.8% 2.2% 2.3% 2.0% 1.9% 2.0% 0.8% 1.1% 0.0% 0.0% 0.0% -0.1% -2.0% -1.3% -2.0% Last 12M Rental Growth Key Growth Mark
Slide 19: Projected 12 Month Rent Growth
Projected 12 Month Rent Growth 8.0% Projected 2020 Rental Growth(1) 8.0% 7.3% 7.0% Key Growth Markets Gateway Cities 7.0% 5.9% 6.0% 6.0% 5.0% 4.5% 4.3% 5.0% 4.2% 4.0% 4.0% 3.2% 2.9% 2.9% 2.8% 2.9% 3.0% 3.0% 2.7% 1.8% 1.7% 2.0% 1.1% 1.2% 1.7% 2.0% 0.8% 1.6% 1.0% 0.5% 1.0% 0.5% 0.0% 0.0% -1.0% -1.0% -
Slide 20: Overall US Office Outlook
Overall US Office Outlook Technology sector remains a key driver of leasing demand, especially in strong growth markets Overall Asking Rents & Vacancy(1) 36 34 Forecast 11.0% 41.8m 75.5m 10.5% 32 Last 12M Net Absorption Last 12M Deliveries 30 10.0% 28 26 9.5% 1.9% 9.9% 24 9.0% 2015 2016 2017 2018 20
Slide 21: First Choice Submarkets Outlook
First Choice Submarkets Outlook Average Property Submarket Last 12M Last 12M Submarket Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Rent Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (US$ p.a.) (%) (%) Seattle, Bellevue CBD 2.7 3.9 - 156.0 53.0 8.2 7.
Slide 22: FY 2019 Performance Updates
FY 2019 Performance Updates Bellevue Technology Center Seattle, Washington
Slide 23: Continued Organic Growth
Continued Organic Growth New Leases Renewals 25.1% 60.8% • Leased a total of 836,000 sf of space for FY 2019 • Over two-thirds of leasing activities were in the tech hubs of Seattle, Austin and Denver • Leasing demand mainly from the fast-growing 2019 technology sector and the professional services
Slide 24: Financial Performance for FY 2019
Financial Performance for FY 2019 Distribution per Unit (US cents) Actual Forecast Actual Actual 6.01 % % FY 2019 FY 2019(2) FY 2019 FY 2018 4.77 4.58 Change Change (US$’000) (US$’000) (US$’000) (US$’000) Gross Revenue 122,886 96,401 27.5 122,886 93,525 31.4 Property Expenses (48,133) (40,149) 19.9
Slide 25: Prudent Capital Management
Prudent Capital Management Limited interest rate exposure with term loans significantly hedged As at 31 December 2019 Debt Maturity Profile 100% Unsecured • US$480.4 million of external loans Total Debt • 100% unsecured 30.1% 30.1% 16.7% 18.7% ▪ US$80 million of revolving credit 4.4% (1) facility Av
Slide 26: Delivering Stable Distributions and Long Term Value
26 Delivering Stable Distributions and Long Term Value Portfolio Optimisation • Focused leasing strategy targeting growth sectors • Proactive and effective asset management • Maximise rental rates and capture positive rental reversions Value Accretive Investments • Pursue growth opportunities to cre
Slide 27: Thank You
Thank You For more information, please visit www.koreusreit.com Westech 360 Austin, Texas
Slide 28: Additional Information
Additional Information Tenant space, Westmoor Center Denver, Colorado
Slide 29: Tech hubs make up ~58% of KORE's portfolio CRI
Tech hubs of Austin, Seattle and Denver make up ~58% of KORE’s portfolio CRI Ranking of Top 10 US Industry Sectors Gross Product (Economic Impact), 2018 est. Manufacturing $2,265 Government $2,264 Lobby, The Plaza Buildings, Seattle, Washington Tech Industry $1,839 Technology – US$ billion Finance a
Slide 30: Class A Work Environments and Tech Campuses of Choice
Class A Work Environments and Tech Campuses of Choice The Innovation Triangle: Bellevue – Kirkland – Redmond • Driven by the tech industry, the Seattle metro added 20,800 office- using services jobs in 2019 – an all- time high for the market and the second highest growth rate in the nation(1) . • Of
Slide 31: Apple: A True Campus Community in Austin
Apple: A True Campus Community in Austin Apple’s Office Distribution in Austin, Texas • In November 2019, announced the NEW CAMPUS start of construction on its new campus in Austin, Texas, as part of its broad expansion in the city(1). • Expected to open in 2022, the new US$1 billion, 3m sf campus s
Slide 32: Denver – An Innovative Community where Aerospace and Technology Thrive
Denver – An Innovative Community where Aerospace and Technology Thrive • A low corporate tax rate, an educated workforce and a wealth of resources make Denver business-friendly. • Colorado is home to over 500 aerospace related companies and suppliers. • Top aerospace contractors include: Ball Aerosp
Slide 33: Healthy Balance Sheet
Healthy Balance Sheet As at 31 December 2019 (US$’000) Total Assets 1,300,615 Investment Properties 1,256,500 Cash and Cash Equivalents 38,226 Other Assets 5,889 Total Liabilities 552,064 Gross Borrowings 480,440 Other Liabilities 71,624 Unitholders’ Funds 748,551 Units in issue and to be issued (‘0
Slide 34: Portfolio Overview
Portfolio Overview NLA Committed occupancy WALE(1) Valuation Property City Location (sf) (by NLA) (in years) (US$m) Bellevue CBD, one of the most active leasing submarket in The Plaza Buildings Seattle 490,994 97.3% 4.3 275.0 Seattle Bellevue Technology Seattle Bellevue, one of the most active leasi
Slide 35: Growing in Value
Growing in Value As at 31 December 2019 As at 31 December 2018 Change Change Property (US$ ‘million) (US$ ‘million) (US$ ‘million) (Percentage) The Plaza Buildings 275.0 252.5 22.5 8.9% Seattle, Bellevue CBD Bellevue Technology Center 144.0 136.0 8.0 5.9% Seattle, Eastside The Westpark Portfolio 199
Slide 36: Tax-Efficient Structure
Tax-Efficient Structure Sponsors(1) Keppel KPA Unitholders Keppel Capital Tax-efficient structure for holding US properties Capital International ▪ No US corporate tax (21%) and Keppel US withholding tax (30%) Management Trustee Management Agreement ▪ No Singapore corporate tax (17%) and Services Fe
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